China Galaxy Securities: Local two sessions are intensively launched, and new areas such as commercial aerospace and low-altitude economy are expected to see more scenarios implemented.

China Galaxy Securities released a research report stating that local two sessions have started intensively, with "new quality productivity" becoming a high-frequency term. Looking ahead to 2025, the layout of future industrial pioneer zones in various regions will be further improved, with continued emergence of industrial policies and technological innovations. New quality fields such as commercial aerospace, low-altitude economy, and AI+ defense are expected to see more practical applications, potentially leading to a significant improvement in the military's new quality combat capabilities and benefiting industries related to the industrial chain. The main points of China Galaxy Securities are as follows: Local two sessions start intensively, with "new quality productivity" becoming a high-frequency term. Currently, 14 provincial units have released their 2025 government work reports. Against the backdrop of the transformation of old and new economic drivers, the government reports have proposed "roadmaps" to accelerate the cultivation of new quality productivity, creating new drivers of economic growth. In terms of new quality productivity, focus is on provinces that are typical military-civilian integrated industries such as low-altitude economy and commercial aerospace. The number of these provinces is expected to increase from 4 out of 14 in 2024 to 12 out of 14 in 2025, with a significant increase in percentage reaching 86% and 64% respectively. It can be seen that low-altitude economy and commercial aerospace have become focal points for the industrial development of most provinces in 2025. With the gradual implementation of investments in related industries, investment opportunities in these areas are expected to be highlighted. Low-altitude economy: Local investments in the low-altitude industry will enter a key phase by 2025. During the local two sessions, "low-altitude economy" has become a key topic of discussion, with investments in various regions accelerating. Guangdong has already gathered over 30% of the national low-altitude industry chain enterprises and plans to create a "1+3+N" low-altitude economic development platform, enhancing low-altitude logistics, urban aerial transportation, emergency rescue systems, etc. Hainan aims to deepen reforms in low-altitude airspace management, promote the construction of general airports, low-altitude aircraft takeoff and landing facilities, and expand low-altitude application scenarios. Shanghai is orderly promoting the construction of the Hongqiao International Low-Altitude Economic Industrial Park and the East China Unmanned Aerial Vehicle Base, nurturing and expanding strategic emerging industries such as low-altitude economy. Compared to 2024, exploration of low-altitude initiatives in various provinces and cities in 2025 will be more proactive. With the implementation of government special bonds and the bias of operator capital expenditures, the infrastructure construction of the low-altitude industry is expected to experience a "bursting year." Commercial aerospace: Constellation networking enters the fast lane. During the local two sessions, "commercial aerospace" has become another key topic of discussion. The construction of commercial aerospace clusters is expected to be further improved with support from various regions, and the synergistic effects brought by industry clustering will accelerate the upgrading and improvement of the industry. For example, in Beijing, a mature commercial aerospace pattern of "South Arrow North Star" has been formed, with China Star Network's experimental satellite launches gradually accelerating. Shanghai's Qianfan Constellation has begun large-scale launch networking, with plans to complete the networking of 648 satellites in the first phase by 2025, achieving regional network coverage. Hainan's satellite super factory has been capped and is expected to start production in June 2025, gradually forming a mass production capacity of 1,000 satellites per year. In 2025, the commercial satellite industry will truly enter an era of dual efforts in demand and supply, with constellation networking entering the fast lane and satellite manufacturing performance expected to gradually materialize. AI Empowering Military Industry: New dimensions of future warfare. The integration of new generation artificial intelligence technology with defense technology is expected to transform and improve the structure of the defense economy and product structure, leading to profound changes in the military field. In the future, the penetration of AI into the military field will rapidly expand from point to surface, with significant growth in segmented tracks. Currently, military-use Siasun Robot&Automation has achieved deployment in the army, with accelerated market penetration and growth rates, leading to a market demand of tens of billions per year. The entry of the Armament Group in 2024 is expected to significantly boost industry development. Risk warning: risks of infrastructure construction of low-altitude economy falling short of expectations; risks of commercial aerospace launches falling short of expectations; risks of demand falling short of expectations; risks of continuous downstream price reductions.